Commissioner, Central Excise, ... vs M/S. Jaydeep Enterprises

[Arising out of Order-in- Appeal No. PIII/RS/187/2012 dtd. 30/5/2012 passed by the Commissioner (Appeals-III), Central Excise, Pune]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner, Central Excise, Pune-III : Appellants

VS

M/s. Jaydeep Enterprises : Respondent

Appearance

Shri. A.B. Kulgod, Asst. Commissioner(A.R.) for the Appellants Shri. Anupam Dighe, Advocate for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 23/1/2015 Date of decision 23/1/2015

ORDER NO. Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. PIII/RS/187/2012 dtd. 30/5/2012 passed by the Commissioner (Appeals-III), Central Excise, Pune, wherein the Ld. Commissioner(Appeals) upheld the demand of service tax and interest confirmed but set aside the penalty imposed under Section 77 and 78 of the Finance Act, 1994 of the Original order. The fact of the case that the respondent is small time service provider as labour contractor and providing service of man power recruitment and supply agency. On investigation, the service tax department has made out a case of non payment of service tax of Rs. 16,24,983/-. In the adjudication the Asstt. Commissioner has confirmed demand of Rs. 16,24,983/-; interest and imposed penalty of Rs. 16,24,983/-. The respondent without disputing the demand paid the entire service tax alongwith interest, however file the appeal before the Commissioner(Appeals) only in respect of penalty imposed under Section 77 and 78 of the Finance Act, 1994. The Ld. Commissioner(Appeals) vide order dated 30/5/2012 upheld the demand and interest thereon however, the penalty imposed under Section 77 and 78 were set aside, therefore Revenue is before me.

2. Shri. A.B. Kulgod, Ld. Asstt. Commissioner(A.R.) appearing for the Revenue submits that as regard the demand of service tax there is no dispute. The Ld. Commissioner (Appeals) in the impugned order while setting aside the penalties has not given satisfactory explanation. He submits that the findings of the Ld. Commissioner (Appeals) inasmuch as service tax paid by the respondent is available as input credit, hence transaction is revenue neutral is incorrect. Ld. A.R. placed reliance on Honble Supreme Court judgments in the case of [2008(231)E.L.T. 3 (S.C.)] Union of India Vs. Dharamendra Textile Processors. As per the said judgment Commissioner had no power either to reduce or to waive the penalty under Section 78 of the Finance Act, 1994.

3. On the other hand, Shri. Anupam Dighe, Ld. Counsel for the respondent submits that the Commissioner (Appeals) has not taken only one aspect that Revenue neutrality but after considering overall facts and circumstances of the case such as payment of entire service tax alongwith interest liability is not disputed from the day of investigation by the respondent. The Ld. Commissioner(Appeals) has correctly dropped the penalty under Section 77 and 78 of the Finance Act, 1994. It is his submission that the service provider is a very small time labour contractor and as in his statement he admitted tax liability from the day of investigation started. The respondent even though in a very poor financial condition and also did not recover service tax amount from the service recipient paid the entire service tax alongwith interest on his own account, therefore all these reasons are sufficient cause for invocation of Section 80 according to which the penalty of Section 77 and 78 of the Finance Act, 1994 are not liable to be imposed. As regard reliance of the Revenue on the Honble Supreme Court Judgment of Union of India Vs. Dharamendra Textile Processors(supra), he submits that there is power vested in the officer to waive the penalty on sufficient cause as provided under Section 80 of the Finance Act, 1994 whereas the judgment of Supreme Court in respect of Central Excise Act 1944 where under unlike Section 80 of Finance Act, 1994 there is no pari materia provision, therefore the said apex court judgment can not be made applicable in the case of service tax.

4. I have carefully considered the submissions made by both the sides and perused the record.

5. I find that the respondent has deposited tax liability alongwith interest admittedly. The respondent is small labour contractor and he born the tax liability by himself which he has not recovered from the service recipients. These are the sufficient cause to invoke Section 80 for waiver of penalty imposed under Section 77 and 78 of the Finance Act, 1994. In my considered view the Ld. Commissioner (Appeals) correctly held that the respondent is not liable for any penalty. I do not find any infirmity in the findings of the Ld. Commissioner(Appeals) in dropping the penalty under Section 77 and 78 of the Finance Act, 1944, I therefore uphold the impugned order. The appeal of the Revenue is dismissed.

(Operative part pronounced in the Court)

Ramesh Nair Member (Judicial)) sk

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